With Barry Gollom, vice-president of secured lending and product policy at CIBC
We are about to buy a new home that direly needs a kitchen and bathroom update. What are our options for financing the improvements?
There are a number of effective approaches to financing a renovation. The one that works best for you will depend on what you mean by "update" and how quickly you will pay off any funds you borrow.
For smaller renovations that you plan to pay off within a short period of time, an unsecured line of credit or even a credit card can provide an easy, accessible solution. If you do use a credit card account, you'll want to consolidate your spending in order to maximize your travel or other points, and so that you have an easy way to track expenses and stay on budget.
For larger projects that will take longer to pay off, a lower-rate secured line of credit may be ideal.
As it is likely you'll be applying for a mortgage to purchase your new home, consider a combined solution such as the CIBC Home Power Plan. It's a mortgage and a line of credit bundled into one product, so as you pay down your mortgage, the limit on the line of credit expands. This option can be particularly useful for larger home improvements that you plan to do over time.
CIBC also offers a cash-back mortgage that has proven to be especially appealing to first-time homebuyers, who appreciate the assistance with closing and moving costs, and to families like yours that plan to redecorate. Homeowners receive cash back of up to three per cent of the value of the mortgage, based on the mortgage amount and term.
Sitting down with a mortgage advisor to talk about your plans and aspirations can help ensure that you have the best financing options for all your home-related needs. He or she will help you develop a budget and build flexibility into the plan so that you aren't derailed by the unexpected.
Buying a home is a major financial decision that should be viewed within your overall financial plan. By consulting an advisor early in the home-buying process, you can ensure that the financing options you choose will meet your unique circumstances and requirements – and provide the flexibility you'll value as your needs and wants evolve.
By the numbers
A recent CIBC poll, conducted by Nielsen Consumer Insights, found that Canadian homeowners put maintenance, bathrooms and kitchens at the top of their renovation planning lists.
- Basic home maintenance (including painting, flooring, general repairs and replacing appliances) 57%
- Bathroom renovations 33%
- Kitchen renovations 32%
- Replacing windows or doors 29%
- Landscaping (including outdoor deck) 27%
- Basement 23%